The record high close of the TSX on May 16, 2025 signals the return of investors’ exuberance. Canada’s major stock exchange is now up 5%-plus year-to-date following a seven-day winning streak. While easing trade tensions helped calm the market, 10 of 11 primary sectors gained amid elevated volatility in the last 30 days.
If you have $4,700 to invest today, Element Fleet Management (TSX: EFN) is a cautious but financially rewarding option. The $13 billion global fleet management company is a solid buy after reporting strong Q1 2025 financial results. At $32.58 per share, the industrial stock’s market-beating return thus far in 2025 is 12.6%-plus.
Market analysts’ high price target in 12 months is $40. Also, EFN pays a modest but safe 1.6% dividend. This pure-play automotive fleet manager offers intelligent mobility. Its scalable operating platform is poised to deliver revenue and earnings growth.
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Deep industry expertise
Element Fleet Management provides end-to-end fleet management services that cover the total fleet lifecycle. Clients outsource fleet management (cars and trucks) via the Element Fleet Partnership Solutions. The tailored mobility solutions under the fleet administration vehicle program drive efficiency and allow customers to focus on their core businesses.
Besides Canada, Mexico, and the U.S., Element Fleet Management operates in Australia and New Zealand. The record performance in 2024 was due to robust client demand, a strong and growing pipeline, and a high-recurring-revenue business model. Expect continued growth across key financial metrics this year and beyond.
Solid start to 2025
Laura Dottori-Attanasio, CEO of Element Fleet Management, said, “Strong client demand, combined with our business’ proven ability to adapt and self-correct, enables us to consistently deliver value for shareholders across dynamic market environments.”
In three months ending March 31, 2025, net revenue and net income increased 5% and 9% to US$275.7 million and $102.3 million, respectively, compared to Q1 2024. According to Dottori-Attanasio, the solid first-quarter results highlight the financial stability and operational resilience of the business.
“This has enabled us to effectively manage potential disruptions from global trade tensions while staying committed to our clients’ success. By leveraging our deep industry expertise, we remain focused on guiding clients through market uncertainties and continuing to support them in achieving their strategic objectives,” Dottori-Attanasio added.
Services revenue is an essential driver of Element Fleet’s growth, while the capital-light business model, a key pillar, enhances the return on equity profile. During the same quarter, services revenue rose 4% to US$152 million from a year ago. Notably, order volumes (US$2 billion backlog) have increased significantly over the past two quarters, notwithstanding rising global trade tensions.
Hidden gem
Element Fleet Management, the leading player in the fleet management sector and top-of-mind choice of corporate clients, has visible growth potential. Despite uncertain market conditions, the low-risk business model continues to display strong fundamentals and resiliency.
Furthermore, management’s focus on innovating, digitizing, and adapting to sustain long-term success will define the future of mobility. Performance-wise, EFN’s overall return in three years is 165.4%-plus (38.4% compound annual growth rate) – a strong showing indeed for this hidden gem in the industrial sector.
